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Anyone who has been a part of a group project will tell you how annoying it can get. Although there were ways around it in school, there is no escaping in the workplace. But group work in a professional setting isn’t as frustrating as it used to be in school. Let’s find out why!
An organizational structure, also known as a corporate structure helps businesses divide their responsibilities by creating different departments. Depending on an organization’s goals and its industry, every corporate structure has its unique characteristics. People are more accountable when there is clarity regarding roles and responsibilities. Read on to see how organizational structures improve business efficiency and make teamwork fun.
Is A Divisional Structure Good For Organizations?
A divisional structure is a type of organizational structure that organizes business activities into categories like products or services, customer groups and geographical locations. Large businesses depend on divisional structures and create individual units, distributing functions between the parent organization (headquarters) and its subsidiaries (the branches).
McDonald’s Corporation, one of the leading fast-food chains in the world is an ideal example of a divisional organizational structure. The overall business is divided into independent divisions that have responsibilities based on operational requirements.
This type of corporate structure not only supports autonomy but also allows organizational flexibility in fulfilling business needs in different markets and locations. Let’s unpack this example of a divisional structure and understand how a typical divisional organization functions:
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Global Hierarchy
It’s no secret that McDonald’s has a global presence. From ‘drive thrus’ to Ronald McDonald, its operations are widespread. Despite the finer branches and divisions, the primary decision-making power rests in the hands of the executives. Therefore, it has created a global hierarchy where the smaller units report back to headquarters. Every mandate will pass from the parent organization to middle managers, restaurant managers and other personnel. This feature is commonly seen in most global organizations.
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Performance-Based Divisions
A divisional structure often uses performance as a metric to introduce or remove divisions. For example, if the Asian chains are generating profits, McDonald’s is likely to expand and open new restaurants. Alternatively, if restaurants aren’t performing well in one region, they are likely to shut down operations. The high-growth markets present considerable potential for business growth.
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Function-Based Groups
Like every traditional organizational structure, McDonald’s maintains function-based groups. There is a people group for human resources management, a supply chain group that oversees the supply chains from beginning to end and a sustainability group for eco-friendly endeavors. They add and change groups according to change in the market or industry demands.
Is A Multidivisional Structure Any Different?
A divisional structure is also known as a multidivisional structure and there are no differences between the two. In a multidivisional structure, one parent organization owns subsidiaries that use the same name and brand. The Walt Disney enterprise is a perfect multidivisional structure example. Various divisions and functional units keep the massive entertainment empire afloat and successful. Let’s explore this example of a divisional structure in greater detail:
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Business-Type Segments
Business-type segments or divisions is the foundational characteristic of Disney. The segments help to focus on specific business types and industries. For example, there is a segment for film and entertainment and another segment for amusement parks and resorts. Despite the diversity, the segments operate under centralized corporate management. The organization has the power to diversify its global business by creating or changing segments.
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Geographical Divisions
Disney not only has a global reach, but it also addresses variations among regional, local and domestic markets. These differences arise from socio-cultural differences and preferences of customers. For example, Disney has produced and supported several movies in India. In addition to producing films locally, it has also provided dubbed versions of international films in regional languages. (Ultram) This is how a divisional organization penetrates various strata of society, despite diverse market demands.
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Functional Groups
Just like McDonald’s, Disney also organizes functional groups for better strategic management. It ensures effective cooperation and collaboration among business-type segments. For example, characters from a Disney movie are sold as merchandise in the amusement parks. Such effective cooperation is possible because functional groups have common objectives and synergy.
It’s clear from these examples of divisional structure that large organizations benefit immensely from this structure. If you want to make the best use of a divisional structure, gain a deeper understanding of your workplace culture and structure. Harappa Education’s Navigating Workplaces course will teach you how to assess the workplace and effectively deal with power structures. Understand your workplace and workforce to boost productivity and workplace success.
Explore topics such as What is an Organizational Structure, Types of Organizational Structure, Matrix Organizational Structure, Divisional Structure & The Difference Between Functional and Divisional Structure from Harappa Diaries and understand how your workplace functions.
